Markets will restart with a bang after the holidays

Daily Analysis - 31/12/2017

Markets will restart with a bang after the holidays

2018-financial-markets


Rest and relaxation are crucial for all living working life forms, market traders included. But don’t expect the traders in this weeks’ markets to wake like stupefied bears after a long hibernation. There are loads of ideas and opportunities percolating around the heads, desks and media of the world’s traders and they are pent up, eager to be expressed. And expressed they will be. Beware sudden and unexpected moves in the assets you watch. But, pay attention to them because they are very likely to be based on sound research and thought conducted during the long break period. Forewarned is forearmed ladies and gentlemen.

Last Week


The news of our week past was that there was little news. Outside the oil patch the world slowed down and will finally reach a halt on Monday the first day of 2018. Two supply disruptions of sizable proportions hit the Brent market and as is usually the case, the knock on to its competitor WTI was immediate. Repairs to the “Forties” pipeline that lands south of Aberdeen will take another week. The pipeline explosion and damage to the Libyan facilities will take a long time to bring back production online. As price stays high, cheating amongst the cartel will increase, pushing inventories up and price down. If we don’t see a big increase in inventories it will stay above $60 for a bit of time. If inventories swell, sell oil.

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This Week


The capitalist world may have ground to a complete halt by tomorrow but it ain’t starting back up slowly. We had best be prepared to hit the ground running on Tuesday ladies and gentlemen because we have major manufacturing reports out this week that will tell us how the competition is squaring up to each other. The NFP is out Friday. We’re expecting the usual addition of about 190 thousand new jobs last month. Pretty par for the course these days. But folks, the big news is the uprising in Iran. The people are venting their rage at the theocracy of the tone deaf running the country and the crackdown will have shades of the House of Saud purge and the Erdogan power grab. This is going to roil the FX market because they are very sensitive to political risk. And the risk to the political order from a serious threat to the regime will have far and wide reaching effects for some time should things really heat up. They haven’t yet but they easily could. The EURUSD chart taken as a proxy for the major currencies shows a weakened US Dollar that will likely strengthen from politically risky developments because the US is seen as the strong hand and not likely to suffer economically from the turbulence. Unlike the Tadawul Index (the Saudi Real) or the Russian rubble or the Turkish lira or the Euro or the Yen.

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